In response to growing interest from investors in Islamic countries relating to Sharia compliant investments in Germany, on 29 October 2009, the German banking regulator, BaFin, hosted the first Islamic finance conference in Frankfurt.

The conference was used, among other things, to discuss necessary amendments to the German regulatory and tax regimes. In this context, BaFin president, Jochen Sanio, noted that he "cannot perceive any reasons why BaFin would not issue a licence to a bank in Germany that offers Sharia compliant financial products" and that "Germany will make it easy for Islamic financial institutions to obtain a licence to sell Sharia compliant products, provided that those products are also compatible with German law."

While Germany's Deutsche Bank and insurer Allianz already offer Sharia compliant products in Muslim countries, no financial institution has, to date, made the move to offer Sharia compliant products in Germany. A remarkable fact considering that Germany, with its large Muslim population, represents a market with bigger potential than that of any other European country. Mr Sanio's comments therefore raise hope that next to the UK, Germany will establish itself as a European hub in the ever-growing Islamic finance market and attract some of the Gulf-based investments currently flowing into the UK and other European countries.